The Hidden Social Security Math Nobody Shows Retirees

[Dennis H]

Bifurcated: eg. Fords on one side, Chryslers on the other. Separate.

 

[SlingLow]

There is a simple algebraic equation for the number of months to break even on SS. I'll use an example to illustrate. Let's say a guy can collect $1,000 at 62 or wait until full retirement age (FRA) at 67 years, (That's my FRA. Your amounts and FRA are available on your personal SS statement). Using 8% as the annual increase (my statement shows closer to 6.5% annual increase) would yield a $1,469 payment at FRA of 67.

The equation for break even would be 1000x = 1469(x-60)

x=the number of months to break even and 60 is the number of months you deferred compensation (67y minus 62y).

Solving for x yields the answer of 188.29 which is the number of months to break even. There are free algebraic calculators online that will solve your equation.

Divide 188 by 12 to get the number of years which is 15.67 years or 15y 8m.

Add 15y, 8m. to the starting age of 62 means you will break even when you are 77y, 8m old.

To proof this we can take the 1st payment amount of $1000 and multiply by 188 (from 62y to 77y, 8m) = 188*1000=$188,000 received at age 77y, 8m.

Then take the 2nd payment amount of $1469 and multiply by 128 mo (from 67y to 77y 8m) = 128*1469=$188,032 received at age 77y, 8m.

This is not the entire answer, just the math part. To make your decision you should look at your other income which can affect your need for this income, savings, expected lifespan, and confidence in the system among other things. In my case I took it at 62 because:

1) For the last 20 years, all of my income has been capital gains, interest income and rental income, which is not subject to the 15.3% fica (SS) tax levied on the self-employed. Because I didn't pay in for that period, my SS amount is on the smaller end, making future increases less meaningful.

2) I don't need this income for retirement which also makes future raises less meaningful. The most common reason for early withdrawal is the need for current income).

3) My father passed at age 47. His father passed at 50. Two of dad's brothers passed at 49 and 50. Longevity is not a family characteristic.

4) I have little to no confidence in the system which you can read as a vote of zero confidence in our government. I honestly thought that SS would reach it's demise before I aged into the system. For me, this is all gravy.

Coincidentally, I had a 40 minute conversation with my buddy in Idaho this morning covering much of this ground. He is retiring next June 1st. I can tell you that everyone's situation is unique, making their decision unique to them. You owe it to yourself to spend enough time and analysis to understand your options and make your best decisions.

 

[Dennis H]

Simple I tell you. Simple. Let’s discuss further.

 

[j-c-c-62]

One important related detail often left unmentioned in your simplistic, yet accurate example shared, what was the above imagined benefactor's total contribution to receive the $188,000 payout, speaking for the "It's my money and I want it now" crowd.

 

[YY1]

That's what I said-

15 years give or take a few months to break even.


My "how long do you expect to live" answer is all over the place.

My family history is anywhere from 42 (uncle) to over 100 (great grandfather).

The rest, that I'm aware of are 66, 73, 80, 92, 96.

My mom is still kickin' at 85 and fully aware and active, living independently.

 

[BSB67]

And that is in some camps is intentional and the point, death by neglect. Because it will effectively collapse and cause major outrage by the majority if no one "messes with it", and everyone can say "don't blame me, I didn't mess with it".

It doesnt and wont work like that.

The solution is not with the majority, it's with the top 10%?, so follow the money applies to find the motivations here.

Certainly not the top 10%. Maybe the top 1%. And does the top 1% really care?

 

[BSB67]

The "rich guy" lawyer said that a really well off person, like your doctor friend, might as well take it early, and get more cash if he lived a normal life expectancy. The folks on the low end of the totem pole needed the money as soon as possible for living expenses. Guys like us, in the upper middle, are at risk of outliving their money if not careful.

This is the way I see it too.

 

[j-c-c-62]

It doesnt and wont work like that.

Then in your mind, how does it work, and why won't it work as I mentioned?
Doing nothing is great a strategy to take down the hated the programs of the powerful.

Certainly not the top 10%. Maybe the top 1%. And does the top 1% really care?

When the top 10% owns 93% of the stock market, they are included by default in this conversation IMO.
And No, they do not care and why we have this issue in the first place.

 

[BSB67]

There is a simple algebraic equation for the number of months to break even on SS.

If this is for me, Thank you. But its not really what I was looking for.

 

[BSB67]

One important related detail often left unmentioned in your simplistic, yet accurate example shared, what was the above imagined benefactor's total contribution to receive the $188,000 payout, speaking for the "It's my money and I want it now" crowd.

If working as an employee (verses self employed) way less than $188,000

 

[j-c-c-62]

So maybe someone here who is getting a thousand a month can share what their lifetime contribution was to receive that $1k benefit.
My guess it could range from $25K to $40K, and why SS is going broke and the claim of "it's my money" rings rather hollow and uninformed.

 

[WileE]

I could post a comment that would jettison this thread into the PF.

 

[Krooser]

I started collecting at '62 but have kept on working.

I have had four major surgeries since I " retired" and things got real tight on SS.

Being a self employed trucker the last 20 or so years before I retired was tuff... had a $19,000 engine overhaul to pay for. Then my bank's slimy president was skimming big $$$ and he was fired but not before slmost bankrupting the bank.

The court appointed a new Prez and he called in every note that was 30 days in arrears including my truck note in an effort to make things right.

My biz and dozens of local restaurants, repair shops, tradesmen and local retailers went OOB as a result.

So I kept working.

13 years later I still collect SS... I still work 2-5 days per week and 30-60 hours.

My house will be paid for in about five months unless I sell something and pay off my
note.

When I retired and kept working until my full retirement age it cost me about $40 in reduced SS benefits... no big deal since my Pt jib was good for $28-30k per year.

I wish I had known my benefits were based on the best last five years of my work...

 

[Krooser]

So maybe someone here who is getting a thousand a month can share what their lifetime contribution was to receive that $1k benefit.
My guess it could range from $25K to $40K, and why SS is going broke and the claim of "it's my money" rings rather hollow and uninformed.

Well it's a Ponzi scheme thru and thru BUT if the govt had invested all that money over the years the average monthly benefit would be $25k not $1400.

 

[Kern Dog]

Are any of you investing in your spiritual future? Between Klaus Schwab wanting to take all you own and Bill Gates trying to depopulate the world, your chances of a long, peaceful life of retirement are slim. Just food for thought. Carry on!

 

[j-c-c-62]

Well it's a Ponzi scheme thru and thru BUT if the govt had invested all that money over the years the average monthly benefit would be $25k not $1400.

However, a true "investment" denotes an acceptable amount risk with the hope of a greater reward. Personally, the last thing that should be at any risk is the last financial safety net, which is SS, and the last entity I would trust to make a sound fiduciary investment with my money would be those collecting my contributions in this case. The original SS concept was to reduce the chances of the elderly living in a cardboard box eating cat food. Your opinion may vary.
Besides, there wasn't that much money relatively idle, it was going mostly going straight out to those who were getting benefits and always has been, hence the Ponzi label. This long-time scheme was hidden in plain sight, proven by so many who claim, "it's my money".

 

[BSB67]

Then in your mind, how does it work, and why won't it work as I mentioned?
Doing nothing is great a strategy to take down the hated the programs of the powerful.

There is what “can” happen, then there is the reality of what will likely happen. When 1/3 of the nations voting block shows up with daggers and pitch forks at congress’s door step, they will do something, and it won’t be screwing the 90%.

When the top 10% owns 93% of the stock market, they are included by default in this conversation IMO.
And No, they do not care and why we have this issue in the first place.

10% is 35 million people. I know a lot of people in the 10%. They are engineers, teachers, non-doctor medical professionals, and industry non-professional workers. None of them have any influence on Federal government matters, none, other than one vote.

 

[j-c-c-62]

There is what “can” happen, then there is the reality of what will likely happen. When 1/3 of the nations voting block shows up with daggers and pitch forks at congress’s door step, they will do something, and it won’t be screwing the 90%.

History, current included is ripe with events few thought at the time could ever happen. As a matter of fact, plans are currently being put in place that daggers and pitch forks, if not outright banned, will be effectively irrelevant in preventing the 90% from being screwed.
Nice sentiment though.

10% is 35 million people. I know a lot of people in the 10%. They are engineers, teachers, non-doctor medical professionals, and industry non-professional workers. None of them have any influence on Federal government matters, none, other than one vote.

The census numbers you are basing your percentage on is strangely being considered recounted downward mid count. Additionally in this discussion a taxpayer to be in top 10% needs AGI of over $190K, not many under 30 reach that, and the average age in the US in 2023 was 39?. We are excluding any non-voters under 18 right? Your 35,000,000 is a bit off, it's a select group no matter what their employment, they have considerable clout and lobby power and have the resources to make themselves heard and be at the front of any line, whether they choose to or not.

 

[Dennis H]

I could post a comment that would jettison this thread into the PF.

Please. This subject requires more “dialogue. Here/there.

 

[BSB67]

AGI is not wealth.

10% is 10%. The majority of them are working stiffs.

Certainly you can believe what you like.